Regional Economic Outlook (REO): Sub-Saharan Africa - Dealing with the Gathering Clouds, October 2015 — Table of Contents

Sub-Saharan Africa, October 7, 2015

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Canonical URL: Regional Economic Outlook (REO): Sub-Saharan Africa - Dealing with the Gathering Clouds, October 2015 — Table of Contents

Growth projection and recent performance:
- Growth at "3¾ percent this year and 4¼ percent in 2016"—still higher than in many other emerging and developing regions but markedly weakened from prior momentum.
Key drivers of the slowdown:
- Severe impact of the sharp decline in oil prices on the region’s oil exporters, notably Nigeria and Angola.
- Falling prices of main commodity exports affecting several countries.
- Broad-based unfavorable conditions also affecting middle-income countries such as Ghana, South Africa, and Zambia.
- Tightening global financial conditions increasing vulnerability for countries with large fiscal and current account deficits.
Risks to the outlook:
- Potential reduction in external financing.
- An uneven global recovery.
- Domestic security-related challenges.
Structural policy priority:
- Further progress toward diversification and structural transformation to sustain high and inclusive growth, generate jobs for the rapidly growing young population, and foster integration into global value chains.

Headline assessment:
- "Economic activity in sub-Saharan Africa has weakened markedly."
Full text highlights:
- Strong Headwinds from the External Environment.
- More Difficult Domestic Conditions.
- Lower Growth amid Persistent Risks.
Special emphasis:
- Necessary fiscal and monetary policy adjustments for countries adapting to the new environment.

Creating fiscal space via better domestic revenue mobilization.
Annex 1.1:
- "Estimating the Tax Frontier" — methodology/analysis supporting revenue mobilization policies.

Recent pattern:
- Strong real GDP growth and substantial trade integration in recent years.
- "Growth in sub-Saharan Africa’s trade volumes has not kept up with growth in the volume of global trade" during this period, and trade imbalances have begun to rise.
Changing drivers:
- Past drivers—improved policies, increased aid, debt relief, abundant global liquidity, and high global commodity prices—have started to dissipate.
Policy implications for sustaining growth:
- Need to diversify away from commodities.
- Increase export sophistication.
- Integrate into global value chains.
Chapter structure:
- Setting the Stage.
- Indicators of Competitiveness: What Do They Reveal?
- Competitiveness and Growth.
- Some Policy Implications.
Annexes and technical work:
- Annex 2.1. Methodology on Construction of GVC-Based REER.
- Annex 2.2. Construction of Import Average and Export Average Relative Price Measures.
- Annex 2.3. Estimation of Duration Dependence of Growth Spells.

Core finding:
- Sub-Saharan Africa has among the highest levels of inequality—both income and gender—in the world, even after accounting for lower levels of per capita income.
Relevance:
- Growing international evidence that such inequality can impede macroeconomic stability and growth (referenced as Box 3.1).
Chapter focus:
- Factors behind high levels of inequality and how they differ from other regions.
- Policy options for reducing inequality and raising sustainable growth.
Chapter structure:
- Sub-Saharan African Trends in Inequality.
- Inequality and Growth Performance in the Region.
- What Drives Income Inequality?
- Policies to Reduce Inequality.
- Conclusions.
Annexes:
- Annex 3.1. Understanding Income and Gender Inequality in Sub-Saharan Africa.
- Annex 3.2. Drivers of Inequality.

Source: Regional Economic Outlook (REO): Sub-Saharan Africa - Dealing with the Gathering Clouds, October 2015 — Table of Contents.